Patronage Hurts Resource Revenue: Experts

The family of the top patronage chain in Cambodia, aka the Hun Inc. family

By Im Sothearith, VOA Khmer
Original report from Washington
27 October 2009

[Editor’s note: VOA Khmer recently spoke with specialists in the field of natural resource management in developing countries and learned that Cambodia is not alone in struggling to use natural resources to benefit its citizens. The resource curse, where natural riches fail to help the poor, is a worldwide scourge, the global experts told VOA Khmer in numerous interviews. Below is Part Eight of the original VOA Khmer weekly series, airing Sundays in Cambodia.]

In Cambodia, natural resource transactions and revenues remain hidden from the public, a product of nepotism and patronage systems that have been practiced for generations, experts told VOA Khmer in recent interviews. The public should be the benefactors of national resources like oil and timber, experts said.

Cambodia practices only a façade of democracy, but transparent management, an important part of true democracy, does not exist, Lao Monghay, a researcher at the Hong Kong-based Asian Human Rights Commission, said.

The government has a habit of keeping its work obscured to the public, with questionable deals serving the personal interests of officials, their associates and the ruling Cambodian People’s Party, he said.

“It’s a tradition,” he said. “It’s a heritage of the communist regime. The deals benefit their group, their party, and they don’t want the opposition party to know about them. Actually, through the National Assembly, members of parliament must know a lot, except on national security issues.”

Local rights groups acknowledge that the government has made some efforts at improvement.

The government has made efforts to involve people in the management of national resources, through the creation of commune councils and other decentralization programs, said Chea Vannath, a political analyst and founder of the Center for Social Development.

However, it is difficult for the government to learn about something new, she said, so an absence of transparent management for resources continues.

“For centuries, since prior to colonialism, during colonialism, and later, there has never been people participation in leadership,” she said. “It is not about hiding, but it is our working culture. It’s our culture.”

Such criticisms are rejected by government officials and ruling party lawmakers.

Nguon Nhel, a CPP parliamentarian and vice president of the National Assembly, told VOA Khmer the legislative body invites responsible officials for questioning whenever a parliamentarian makes the request.

“The National Assembly questions the government at a session to pass the annual budget every year, about everything, including taxes or duties at the borders, even tax from casinos, all sources of income, how much comes to the national budget, the reasons for losing some of it, and what the government’s measures are to collect taxes,” he said.

The Assembly also questions officials on forestry concessions, he said.

“The government openly answers those questions, and it is broadcast publically throughout the country,” he said. “Nothing to hide.”

Cheam Yiep, CPP chairman of the National Assembly’s finance committee, said the Assembly and the administration are aware of the essence of transparency and have made laws related to resource management.

The National Assembly has also requested assistance from experienced international institutions, such as the World Bank, International Monetary Fund, UNDP and the Extractive Industry Transparency Initiative, he said.

“We have requested the Extractive Industry Transparency Initiative to help us,” he said. “They have helped us a few times to host seminars in Phnom Penh. The purpose of the seminars is to enable our citizens, government officials, and experts to clearly understand the aim of laws on oil and gas and their transactions in Cambodia.”

Despite such assurances, some of Cambodia’s traditions have made it into law.

The 2001 Law on Mineral Resource Management and Exploitation provides confidentiality “of all documents and information,” such as application forms, reports, plans, notices and related documents, unless the license is terminated or the license holder approves public disclosure.

Such secrecy in public transactions is not an element of democracy, experts say.

And while some officials have indeed been questioned before the National Assembly, they do not come frequently enough to ensure checks and balances, said Son Chhay, a parliamentarian for the opposition Sam Rainsy Party. The National Assembly lacks the power to invite officials as often, or as high-ranking, as necessary, he said.

“Our prime minister never shows up at the National Assembly to be questioned, not even once since 1993,” Son Chhay said. “I am the only person who was able to invite a few ministers to be questioned over the last 15 or 16 years. The forestry issue was one of the subjects for questions, but questioning once in a while is not effective."

“This irresponsibility allows the destruction of natural resources,” he said. “Even the idea of restoring what has been degraded doesn’t exist, because everyone wants more benefits to pay for the protection of their positions.”

Ordinary citizens have voiced concerns over government measures, saying confidential management of natural resources leads to the suspicion of corruption.

Bun Nguon, who asked to be indentified only as a resident in Preah Sdech district, Prey Veng province, said while the country’s natural resources are exhausted, revenues from natural resources are unknown to the public.

“I am aware that the government has revenues from natural resources,” Bun Nguon said. “But we never know how the government gets the revenues, what contracts are like in what procedures, what percentage goes to investors and what percentage the government gets. It has never been broadcast through existing TV or radio stations, or promulgated through existing local authorities.”

“For me, I want the government to manage the country’s natural resources transparently,” said Chhet Sarom, a resident of Phnom Penh. “It is to be known to all people because it belongs to everyone, not to any individuals. Don’t hide this work because it doesn’t belong to only you. By hiding all the transactions, it means you own the country alone; all the people are your slaves. By hiding the deals, it means they look down on people. So, the management should be transparent because you cannot live alone in the country without people, like Pol Pot, who tried to kill all the people.”

Som Sen, a resident of Siem Reap province, said many fish species and fine wood have gone extinct and other natural resources are exploited, but where the revenues go is unknown.

“I want to know that where the revenues of the natural resources, which belong to people, go,” Som Sen said. “Every year, I hear that the government seeks loans from the international community, asks for international assistance. And public infrastructure and public buildings are gifts or donated by the prime minister or by other government officials, but nothing comes from the national budget, the budget from the natural resource business. For instance, roads are either financed by international loans or aids. The government is always asking for aid.”

Government figures show that $3.6 million went into the national budget in 2008 for sales of forestry and mining concessions, with income from these expected to increase to $4.6 million in 2009.

A Finance Ministry official said this was due to sale of concessions only. The resource revenues have not been reserved for future investment, but go to the national budget for general public spending.

The key factor contributing to effective management is transparency. The arrangement with the private sector, contracting process, and how the revenues are spent have to be transparent, experts say.

People need to be involved in making decision or at lease know decision making process.

Experts are concerned that as Cambodia is exhibiting a pattern similar to extreme cases in other countries around the world, and they are concerned that, if the government doesn’t learn from its past and fails to reform resource management, the country will fall deeper into poverty, see the gap between rich and poor widen and fall into a resource curse.